Clean Air Act Does Not Preempt Property Owners' State Law Tort Claims, Says Third Circuit in Case of First Impression

In late August, the U.S. Court of Appeals for the Third Circuit overturned a district court decision and held that the Clean Air Act (CAA) did not preempt the tort claims of a putative class of property owners who alleged that air emissions from a neighboring power plant diminished their property values. This decision, a case of first impression, has the potential to spark other similar tort lawsuits by residents who live near facilities regulated under the CAA.¹

Background

In April 2012, plaintiffs filed suit in Pennsylvania state court on behalf of at least 1,500 individuals who own or inhabit property within one mile of GenOn's Cheswick Generating Station, a 570-megawatt coal-fired power plant in Allegheny County, PA. Plaintiffs alleged that the plant had released "malodorous substances and particulates," causing fly ash and coal dust to settle onto the plaintiffs' properties. Plaintiffs alleged that these emissions interfered with the use and enjoyment of their properties and caused property damage. Plaintiffs sought monetary damages under theories of nuisance, negligence and recklessness, and trespass. 

GenOn removed to federal court and promptly moved to dismiss the action on the ground that the CAA preempted plaintiffs' state law tort claims.

The Parties' Arguments

GenOn argued that allowing plaintiffs' state law claims to go forward would undermine the CAA's comprehensive scheme and stymie EPA's ability to strike the appropriate balance in implementing emissions standards. GenOn relied in particular on the U.S. Supreme Court's recent decision in American Elec. Power v. Connecticut (AEP),² in which the Court found that the CAA "occupied the field" of air emission regulation and therefore preempted federal public nuisance claims involving greenhouse gas emissions. GenOn also argued that the CAA's states' rights savings clause, which reserves for states the right to "adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution...,"³ applied only to state regulations and not state common law claims. Finally, GenOn argued that plaintiffs' claims "raise pure questions of policy or governmental practice" and are therefore barred by the political question doctrine.

Plaintiffs countered that the case was governed by the U.S. Supreme Court's decision in International Paper Co. v. Ouellette,⁴ which held that the Clean Water Act's states' rights savings clause (similar to the one in the CAA) did not bar a plaintiff's state common law claim for injury to his property values—so long as it was the common law of the state in which the discharge source was located. Plaintiffs also argued that their claims did not disrupt the CAA's regulatory scheme because they sought compensation for property damage and not regulation of air quality, and because many courts have allowed citizen suits to combine statutory and common law claims.

The Court's Decision

The Third Circuit ruled that the CAA did not preempt plaintiffs' common law tort claims. The court relied heavily on Ouellette, agreeing with plaintiffs that the CWA allowed state common law claims. The Third Circuit ultimately found "little basis for distinguishing the Clean Water Act from the Clean Air Act," noting that the two statutes had "nearly identical" savings clauses and employed similar "cooperative federalism" structures. 

In so holding, the Third Circuit purported to join the Sixth Circuit (which ruled in Her Majesty the Queen in Right of the Province of Ontario v. Detroit that the CAA did not preempt plaintiffs from suing a municipality under a state mini-NEPA statute⁵) and the Fourth Circuit (which applied state nuisance law in North Carolina ex rel. Cooper v. Tennessee Valley Authority and held that Ouellette was equally applicable to the CAA⁶).

The Third Circuit also disagreed with GenOn's public policy concerns. The court opined that because the CAA explicitly allows states to impose stricter emissions standards, restricting common law suits to those brought under the state law of the source of emissions would not expand the number of state laws to which a regulated party would be subject. The court also acknowledged that other courts had allowed plaintiffs to sue for damages under state nuisance law for air pollution, and found that the political question doctrine had never been applied to "the redress of individual property rights for pollution."

Implications

The Third Circuit's decision deals a blow to regulated parties' efforts to expand the U.S. Supreme Court's recent decision in AEP (holding federal nuisance claims arising from climate change preempted) to state common law claims. Because it is the first circuit court decision to explicitly extend Ouellette to private nuisance claims for air pollution, the ruling may have the effect of encouraging more class actions by residents living near facilities regulated under the CAA. Indeed, just days after the Bell decision, the prevailing plaintiffs' attorney filed a similar suit involving a different public utility in the same federal district.⁷ Owners of facilities within the Third Circuit—and possibly beyond—may become targets of a new wave of state tort actions from newly-emboldened neighbors.

 

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¹ Bell v. Cheswick Generating Station, et al., -- F.3d --, 2013 WL 4418637 (3d Cir. Aug. 20, 2013).

² 131 S. Ct. 2527 (2012).

³ 42 U.S.C. § 7416.

⁴ 479 U.S. 481 (1987).

⁵ 874 F.2d 332 (6th Cir. 1989).

⁶ 615 F.3d 291 (4th Cir. 2010).

⁷ Jesso v. Hatfields Ferry Power Station, et al.,2:13-cv-01232-DSC (U.S.D.C. W.D. Pa.) (filed Aug. 27, 2013).

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